Employers that rely on arbitration agreements should pay attention to a recent Sixth Circuit decision. One plausible sexual-harassment claim can keep an entire lawsuit in court—even claims that would otherwise go to arbitration.
TL;DR: The Sixth Circuit held that when a complaint plausibly alleges a sexual-harassment dispute, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA) makes a predispute arbitration agreement unenforceable for the entire case, not just the harassment claim. The employee’s ADA claims therefore stayed in federal court instead of going to arbitration.
The arbitration fight
The employee sued her former law firm employer and brought several claims, including a Title VII sexual-harassment claim and two ADA claims involving disability accommodation.
The employer had a broad arbitration agreement and moved to enforce it.
Its position was straightforward: even if the harassment claim stayed in court, the ADA claims should still go to arbitration.
The employee pointed to the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act and argued that once a lawsuit includes a sexual-harassment dispute, arbitration cannot be compelled.
The key word in the statute: case
The Sixth Circuit first held that the employee’s harassment claim plausibly alleged a hostile work environment. If that claim failed, the remaining claims would go to arbitration. With the harassment claim moving forward, the court turned to the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act.
The statute says that “no predispute arbitration agreement … shall be valid or enforceable with respect to a case … that relates to a sexual harassment dispute.” (emphasis added). The employer argued for a claim-by-claim approach. Under that view, the harassment claim could remain in court while the ADA claims would still be arbitrated.
The Sixth Circuit rejected that argument.
Congress used the word case, not claim, and a case means the entire lawsuit. Once a complaint plausibly alleges a sexual-harassment dispute, the arbitration agreement cannot be enforced for any claims in that lawsuit. The employee’s ADA claims therefore stayed in court. The court also noted that this reading aligns with an emerging consensus among district courts interpreting the EFAA the same way.
What this means for employers
⚖️ One claim can determine the forum.
A plausible sexual-harassment claim can keep all claims in the lawsuit out of arbitration.
📑 Motions to dismiss now carry more weight.
If the harassment claim is dismissed, arbitration may still be available. If it survives, arbitration may be off the table entirely.
📝 Expect strategic pleading.
Because the presence of a harassment claim can determine the forum, plaintiffs’ lawyers may include harassment allegations alongside other employment claims.
Bottom line
The EFAA uses the word case, and the Sixth Circuit took that word seriously.
Once a complaint plausibly alleges a sexual-harassment dispute, an otherwise valid arbitration agreement may not apply to any part of the lawsuit.
One harassment claim can knock an entire case out of arbitration.